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Investment commitments robust: EDB

$12.1b fixed-asset investments pulled in last year; investment level expected to stay steady this year

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Despite rising costs and a tighter labour market, Singapore still pulled in strong foreign investment commitments last year, the Economic Development Board (EDB) said yesterday - PHOTO: SPH

[SINGAPORE] Despite rising costs and a tighter labour market, Singapore still pulled in strong foreign investment commitments last year, the Economic Development Board (EDB) said yesterday.

The investment-promotion agency also predicted that this level of investments will hold steady this year.

EDB attracted $12.1 billion in fixed-asset investments last year, a drop from the $16 billion that came in for 2012. The agency added, however, that the 2013 figure was well within its forecast of between $11 billion and $13 billion.

In any case, EDB chairman Leo Yip said at a press conference that the 2012 investment number had been inflated by one-off chunky projects, making the year an aberration from recent years.

"If you look at the trend over the last five to 10 years, you will see that $12 billion is actually well within the range we have secured.

"There were several spikes - including that in 2012 - and those spikes were big investments."

Between 2004 and last year, there were three years when investments shot past that achieved last year: 2007 ($17.2 billion), 2008 ($18 billion) and 2012 ($16 billion). For the rest of the decade, investments were between $9.4 billion and $13.7 billion yearly.

Last year's investments are likely to create value-added of $16.7 billion for the year, which is within the $16 billion to $18 billion projected.

EDB said the investments are tipped to generate 21,400 skilled jobs and a record $7.8 billion yearly in total business expenditure (TBE), up from $6.2 billion in 2012.

A big chunk of the TBE are salaries, said Mr Yip.

EDB said the strong TBE commitment, sitting in the upper bound of its forecast of $6.5 billion to $8 billion, came from the setting up of several significant headquarters with regional and global functions in Singapore.

Mr Yip said: "The investments achieved by EDB in 2013 reflect Singapore's strong position as a global business hub, as multinational corporations and other companies continue to be attracted to the market opportunities in Asia."

He said that EDB has not lost any investment projects as a result of the tightened labour market and changes to the foreign worker policy here. "They have not as a factor swung their business decisions. No company has told us, 'Look, we don't want to come to Singapore because your manpower situation has made you less attractive than before.' "

He maintained that overall, including ease of operation and capability, Singapore has stayed attractive to foreign investors.

This year, EDB is looking to attract investments of between $10 billion and $12 billion with TBE of between $6 billion and $7.5 billion. It also expects the number of new skilled jobs created this year to fall 25 to 35 per cent to between 14,000 and 16,000.

"It's a steady level of investments that's in keeping with where Singapore is today, in its phase of economic development," Mr Yip said. "Our cost structure is approaching that of the advanced economies, so really, the growth we seek has got to be high-value-added, productivity-driven."

The investments projected for 2014 are at a steady level, also in keeping with Singapore's workforce growth rates and land considerations, he added.

Electronics was the top investment sector last year, accounting for 27 per cent of total investments. But commitments in electronics fell to $3.3 billion, down 46.8 per cent from 2012.

Investments in the chemical sector, where the biggest chunk (42 per cent) of total investments went to in 2012, dropped 62.7 per cent to $2.5 billion last year.

EDB's managing director Yeoh Keat Chuan said the sector is now in the down-cycle and companies there are now making smaller and more capital-efficient investments.

Meanwhile, the semiconductor industry has entered a phase in which it was uncertain that the recovery is clearly on a strong track.

He said: "They're holding off from making major greenfield investments. So what they are doing is making incremental expansions in order to be able to tweak and expand their existing capacity."